Spotlight on the economy: Jobless claims lay an (Easter) egg again

Easter time isn’t just full of surprises for kids every year. There’s usually a hidden egg for investors and economists too – but not the kind that could be considered a treat.

Economists at Nomura Securities have found that the number of people who apply for new unemployment benefits tend to soar around Easter, then fall back to prior levels soon thereafter.

“In the past three years, initial claims increased, on average, 20,000 in the week including Good Friday and declined, on average, 21,000 three weeks later,” Nomura economists wrote in their weekly U.S. overview.

The volatility of the data isn’t really a surprise, but time and again some investors get fooled by the Easter-related spike in jobless claims. Usually the signals are false, though, and the underlying trend in the economy basically remains same.

The same pattern appears to have repeated itself in 2013. Initial jobless claims jumped to 388,000 in the week that included Good Friday from 357,000 in the prior seven-day period. Claims have since fallen to 352,000 and are expected to hew close to that mark when the latest weekly report is released Thursday at 8:30 a.m.

The spike is largely related to how the government adjusts the claims numbers to account for seasonal variations. Claims are much higher (or lower) in some weeks of the year than others even when the health of the economy is the same.

Without the seasonal adjustment, the weekly claims report would give off more false alarms – showing excessive improvement in some weeks and surprising deterioration in others. That’s why there very little complaint among investors about the use of seasonal adjustments – and none among economists.

Easter causes the claims data to whipsaw in most years. In 2011, for example, initial claims jumped from 409,000 to 466,000 and then sank to 416,000 in a one-month span surrounding Easter. In 2009, new claims shot up from 600,000 to 641,000 around the Easter holiday, before reverting back to 600,000 a few weeks later.

The upshot: don’t read too much into the movement of jobless claims in late March and April. Other economic data are more reliable as near-term barometers of the direction of the economy.

Of course, even those indicators are showing more weakness in the U.S. economy. It’s the third straight year growth has tapered off in the spring or early summer after a quick start.

Story Conversation

About The Tell

The Tell is MarketWatch’s fast and engaging look at trends and themes in the day’s markets. Drawing on our reporters, analysts and commentators around the world, as well as selecting the best of the rest online, The Tell is all about the pulse of the markets through news, insight and strategic information to help you make the best investing decisions. Got a tip? Tell us at TheTell@MarketWatch.com